Business Columns & Blogs

Airbus is turning 50. What’s that mean for Boeing?

We’re in the business of noting important business-history milestones and anniversaries, why the original event was significant and why it’s still relevant.

So here’s one that, at least in this corner of the world, is a huge deal, even if it doesn’t fit neatly into a category of provoking celebration or mourning or warm nostalgic sentiment or worry or anger.

Airbus turns 50 this year.

Although it hasn’t operated formally under that name for its entire existence, the European aerospace consortium considers 1969 the starting point of its existence, with (according to a narrative on its website) governmental ministers from France and Germany signing “an agreement at the 1969 Paris Air Show for the joint-development of the A300 aircraft, a first European twin-aisle twin-engine jet for medium-haul air travel.”

What has it achieved since then?

Says locally based aviation analyst and consultant Scott Hamilton, “Airbus now, by some measures, is the No. 1 airliner company in the world.”

That’s based not just on metrics like orders, deliveries and market share, but on a comparison of plane models up and down the range and size spectrum and on the sense of who is influencing whose decisions.

In recent years, Hamilton notes, Airbus’ decision to take to Bombardier’s C Series program prompted Boeing in turn to acquire Brazilian plane maker Embraer. The success of Airbus’ single-aisle 320 family of aircraft, which landed such customers as American Airlines, “caused Boeing to launch the 737 MAX, an airplane it didn’t want to build,” he wrote recently.

This will no doubt cause a degree of discomfort locally among those whose employment, directly or indirectly, depends on a thriving Boeing. In the pre-tech era, that meant just about everyone, and even with the rise of Microsoft, Amazon and the rest, Boeing is still a critical influence on the regional economy.

That discomfort is complicated by several factors, beginning with the region’s own increasingly complicated relationship with a company long thought of as our own — even though it’s not.

Between the headquarters move, labor strife, moving production to South Carolina, the threat to move even more and a perceived antipathy toward the Puget Sound region (more pronounced in the Jim McNerney era than under his successor), the locals’ longstanding loyalty to and support of Boeing has been tested. You can still buy “If it’s not Boeing, I’m not going” stickers (online through the Boeing store, for your shopping convenience), but the enthusiasm with which such a sentiment might be publicly displayed and expressed might not be as widespread or as strong as in years past.

Airbus is also not just some distant rival to cheer against. Many of the region’s Boeing suppliers also are Airbus suppliers, and Airbus has publicly said it wants to do more business with producers here. It held a recruitment meeting in Seattle last year as part of an effort to line up more local suppliers.

Supplying both companies, and others in the aerospace business, is a smart strategy for those suppliers. Too-heavy reliance on one customer is risky; diversification of the customer base also provides a useful counterbalance should one customer lean a little too heavily on suppliers to cut costs, as Boeing has been accused of doing.

It’s also no small matter that Airbus is now an American manufacturer with its assembly facility in Alabama. That might not make much of a difference in this region, but on a national scale it adds to Airbus’ clout on the perpetual issue of tariffs and subsidies.

Just to add to the discomfort, Airbus is holding its birthday party (complete with commemorative book and a flyover of its aircraft in Toulouse, France) at a time when Boeing is mired in trouble. The 737 Max is grounded, just last week reports surfaced that the 777X might be running late, and the company’s safety culture and management are under scrutiny. Not surprisingly, the entire discussion of a new airplane model and where it might be built has been shoved not to a back burner but off the stove entirely.

Boeing has, at the moment, a lot more to worry about than Airbus and other outside competitors — but it has plenty to worry about on that front, too. Mitsubishi Aviation has been developing its regional jet (up to 100 seats), testing the aircraft in Moses Lake. Its parent company is talking to Bombardier about acquiring the Canadian company’s regional jet program. Meanwhile the Chinese are testing an aircraft that will compete with the 737 Max and the A320.

For as expensive, risky and technologically challenging a business as it is, commercial aviation is remarkably fluid. In Airbus’ 50 years of existence, some passenger jet makers have departed (Lockheed, Douglas, Fokker), while new entrants have emerged. Boeing’s and Airbus’ fortunes have ebbed and flowed. This isn’t the first time Boeing’s future has been so open to question, but there have been occasions when it was Airbus whose competitive longevity was in doubt. Airbus has earned its 50th birthday celebration, but that comes with no guarantee about what sort of position or mood it will be in to celebrate its 60th. Or 55th. Or even 51st.

Bill Virgin is editor and publisher of Washington Manufacturing Alert and Pacific Northwest Rail News. He can be reached at bill.virgin@yahoo.com.
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